Okay. I read Brandon Turners book on rental property investing. I've been scanning zillow and zillow rentals for starters and using the "50% test" to quickly rule things out. In Utah right now prices are kinda crazy and nothing seems like it will cashflow on day 1, even using a "30% test". Here's what I found:
- Mobile home listed for $45k. 3beds, 2bath, 924 sqft.
- I can see similarly sized APARTMENTS and HOUSES in the surrounding blocks listed for rent at around $1k/month— but no other MOBILE HOMES for rent. Maybe there's a reason?
- Planning to put 20% down, making the mortgage $36k, bringing the payment to $200/month
- Home was built in 1984. Listing says new roof and appliances and "owner will provide a flooring allowance". Shed and all contents are included (lawn mower, yard equipment, etc)
- Been owned by the same guy for 20 years. Says he's not open to seller financing :(
- Using the "50% test" described in Brandon's book, that makes for half the rent being saved for all expenses.
So, check my rough math? what am I missing?
- $700/month, all expenses paid
- Rent for $1,000 means $300 cashflow on day 1, right? Wrong?
Thanks in advance for looking and for your advice!
Also a disclaimer— I'm not at all attached to this ^ property or anything else I've seen— I guess I wanna know if I'm thinking the right way and doing the right kind of math. I've lived in the city where the property is for several years and know the area fairly well... I just know nothing about mobile homes.
They depreciate in value unlike a brick and mortar home.
Has the title been eliminated? Meaning it and the land are combined as real property?
Or is it trailer only with lot rent to pay? How old is it?
I've had a few mobiles in parks and a couple with land. I either sell and carry the paper or rent with an option to buy. Mobiles are a lot of work to maintain as long term rentals in my experience. Chinzy fixtures and the particle board floors get soft.
Many mobile home communities don't allow rentals. Especially in Utah it will be very common to see a restriction for owner occupants only. If you're buying a manufactured home for $45k, it's highly likely it's in a park and will have similar restrictions. Make sure to account for a ~$350 lot rent, as you won't own the land.
Your calculation has "$700/month all expenses paid." Is this advertised by the community? Or are you planning on getting financing? You can only get a 30 year fixed mortgage on real estate with an affixed home, which we're guessing is not what you're looking at. You'll need to pay cash or get some alternative financing.
Holy wow thanks for the fast responses guys.
There is a pad rent of $400 a month, which answers the question about the home and land being combined.
@Steve Vaughan my original post says it's a 1984 mobile home
I just found out they don't allow renters either and they prefer a cash purchase so @Skyler Smith you called it re: financing. Suddenly this isn't a deal at all. Some of you may be chuckling. Hee haw.
Ok. Well ¯\_(ツ)_/¯ still a lot to learn. I'm patient! I've texted a few agents letting them know I want to acquire my first rental property and I get the feeling saying this is scaring them away... because I'm just another wannabe investor. Trying to target podcasts/webinars for working with Agents if you're new... got any helpful links?
Sounds like mobile homes aren't all that great for new Utah investors in late 2019. I'll keep looking though. Does anyone here have renters in mobile homes in the SL or Utah valleys? A 5 min google search doesn't answer whether or not it's legal/illegal at a state level...
I'm interested in finding a BRRR home. I used to flip houses as a contractor apprentice and am not afraid of bigger jobs. Seems like without access to the MLS I need to find a good agent.
I think you're on the right track. Don't get bogged down in the education component, but you at least need to understand the basics of what you're buying, so good on you for continuing your education. An agent that understands investing (not all do, unfortunately) will help you, but don't rely on them to find the deals for you. I've got a duplex on the market up in Logan that has pretty solid value add potential, would be great for a first time investor. You could take a look at that if you're interested in looking that far North
@Tyler Ruff I think you are thinking about it in a good way, but Utah is a tough market right now. It can be demoralizing to read investing books that tell you only to buy a 1% rule property and then try and find that right now in Utah's market. Are you considering renting out your newly constructed home and moving? Fix n flip deals are not easy to come by these days, but I know of a few investors that are still seeing some success.
@Skyler Smith Thank you for the information, and the offer. I think I wanna stick closer to home for now though. I will continue my education and piling up my savings :)
@Amy Kendall Good questions, haha. I think it would have to be an incredible deal you would probably want to snatch for yourself to get my wife and I out of this house... Fully admit it's a comfort we're kinda unwilling to give up as we'll be expecting our first child soon! Yes, even finding a 1% test-passer is proving difficult. I'm looking for a BRRRR home within 50 miles of Lehi. I'm patient and can wait 6 months to find the perfect first deal if I have to— I'm excited but not so excited that I'd pull the trigger on an okay deal. Still not confident in my own ability to even know what an 'okay' or 'great' deal would be in Utah anyway...
@Tyler Ruff welcome to Utah. As mentioned previously by everyone the Utah market is very difficult right now especially the 1% and 50% rules are very difficult to follow. With that being said you will probably have to market to find your own deals or have one of the best agents in the state to help you. That being said there are many things you can do to help you right now so when you find the deal to capitalize it. Feel free to reach out to other investors close to you and see if you can learn from them via shadowing, interviewing or helping them.